Richard Spencer v. Prudential, et al.
Published: Mar. 15, 1997 | Result Date: Feb. 13, 1997 | Filing Date: Jan. 1, 1900 |Case number: EC007662 – $0
Judge
Court
L.A. Superior Burbank
Attorneys
Plaintiff
Defendant
H. James Keathley
(Keathley & Keathley LLP)
Experts
Defendant
Richard M. Rosenthal
(technical)
Facts
In 1988, defendants Steve Gross, Glenn Pace and pace/Gross Properties (collectively referred to as the Pace/Gross defendants) purchased a single-family residence located at 3440 Laurie Place in Studio City, (the property). The Pace/Gross defendants were represented by Serge Cohen and RML Realty, L.P., a Delaware limited partnership, dba the Prudential California Realty (collectively referred to as the Prudential defendants). In 1988, the Pace/Gross defendants formed a limited partnership (Laurie Place Ltd.) to purchase and remodel the property. Cohen's father-in-law also purchased an interest in the limited partnership as a gift for his daughter and son-in-law, and an interest in the limited partnership for himself. Cohen was aware of his father-in-law's purchases. The property was remodeled with additional square footage being added to the first floor, a second story master bedroom/bathroom was added, along with a pool and spa. The entire grounds were upgraded and landscaped. After being interviewed by the Pace/Gross defendants, Prudential was selected as the listing broker. Cohen was the listing agent. The property was listed in 1989 for $1,275,000. A multiple listing set up sheet was prepared by Prudential. The information concerning the square footage of the house and lot were obtained from the architect who designed the remodel and from public records. Plaintiff Richard C. Spencer saw an ad in a magazine for the house. Richard Spencer held a law degree, completed courses for a Class 1 securities license, was a licensed real estate sales agent, had taken half of the classes to become a real estate broker, and was the business manager for his son Alan C. Spencer, who was in the entertainment industry. Richard Spencer, after looking at the property twice, wanted to make an offer. He contacted Cohen to assist him. Richard Spencer offered $1.2 million for the property. Cohen provided and reserved all of the appropriate contingencies in the offer. Richard Spencer was allowed and received two home inspections by a contractor and received two geological reports. Certain conditions were noticed and their correction became part of the escrow. Richard Spencer asked for verification of the square footage of the home and lot. Cohen asked and received from the architect his measurements and calculations regarding the square footage of the house. This information was given to Richard Spencer along with the assessor's plot map showing the property's square footage. Escrow closed on Jan. 29, 1990, all contingencies having been satisfied or waived. The Spencers put $300,000 down and financed $900,000. Prior to the close of escrow, Cohen did not disclose to the Spencers his or his father-in-law's interests in the limited partnership that was selling the property. According to the defendants, approximately one year after the close of escrow, Alan Spencer's directing and producing career took a downward turn, as did the real estate market. At the same time the Spencers began noticing various alleged problems in the house. However, in 1991 the Spencers listed the property for $1,775,000. The Spencers filed an action on Jan. 28, 1992 against the Pace/Gross defendants for intentional misrepresentation and concealment of various defects with the house. Richard Spencer filed for bankruptcy in 1993 and the Spencers lost the home in foreclosure in 1994. The plaintiffs also alleged intentional misrepresentation and concealment against the Prudential defendants along with breach of fiduciary duty regarding the non-disclosure of the interest in the seller, the difference in square footage of the lot and house, and alleged defects. The only causes of action which went to the jury were intentional misrepresentation against the Pace/Gross defendants and intentional concealment against Serge Cohen. (Prudential had been previously determined not to be liabile to the plaintiffs for any of the damages sought).
Settlement Discussions
Per the defendants, the plaintiffs made a settlement demand for $1 million and the defendants made a settlement offer of $50,000.
Damages
The plaintiffs alleged in excess of $1.2 million in damages, attorney's fees and costs.
Result
CONT. OF FACTS *** The plaintiffs brought this action against the defendants based on real estate fraud theories of recovery.
Other Information
The verdict was reached approximately five years and one month after the case was filed. SETTLEMENT CONFERENCE: According to the defendants, this case had six settlement hearings during which time the defendants made various offers of settlement, all of which were rejected. ARBITRATION: An arbitration was held in March 1994 before Judge Title resulting in a defense award. The palintiffs requested a trial de novo.
Deliberation
3 hours
Poll
12-0
Length
12 days
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